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Microcap & Penny Stocks : Pharmos(PARS) -- Ignore unavailable to you. Want to Upgrade?

To: ROBERT M. SILVER who wrote (1045)	7/19/1998 12:08:00 AM
From: Ariella	Read Replies (1) \| Respond to of 1491

A self quote from post 283 on this thread, made in March 1998, only 4 months ago though it seems like a lifetime: <<... The recent FDA approvals for Lotemax and Alrex begin to address the recurring revenue question. But how much revenue will these new drugs bring to PARS? Most estimates of the Lotemax market that I've seen include US only. They estimate that Lotemax will capture about 25% of the roughly $100 million market and that, net of royalties and the cut due to B&L, Pharmos will get approx. 20% of that amount. Twenty percent of $25 million is $5 million in yearly sales. Add a similar amount of sales for Alrex, and we see a revenue run rate of around $10 million in the near future. This assumes of course that the price sensitive, US healthcare system, permits reimbursement for these new drugs to an extent that costs for their manufacture/discovery is adequately recoverable. (How important is this factor? See yesterday's news on biotechnology giant Amgen Inc. --Nasdaq:AMGN-- which gained $3 3/8 to $58 3/8 simply because the Clinton administration eased Medicare reimbursement guidelines for the company's anti-anemia drug.) Lots of items come between the revenue line and eps, however, and it doesn't seem to me that the majority of these revenues will flow to the bottom line initially. For starters, there's the accumulated $5 million in advances against future sales which is owed back to Bausch & Lomb as part of the partnership agreement between the two companies. Secondly, PARS has publicly stated its intention of continuing a high level of R&D for other potential drugs (the 9-month R&D bill through 9/30/97 was $3.7 mill.) And general and administrative costs, plus depreciation and amortization, already run in excess of $2 million per year. True, the $70.2 million accumulated deficit will probably shield us from taxes for quite a while once sales of Lotemax and Alrex begin. But the large number of common shares (34.1 million at 9/97), likely to get larger as the company raises equity capital (if fully implemented this month's Series C Convertible Preferred Stock Private Placement would put over 9 million more shares into the eps calculation), means continued dilution of eps....>> My earlier revenue calculation hasn't changed a great deal and from where I sit, you're "guessing" we will be at 100% ramp-up for US Alrex/Lotemax sales in the third quarter even though we don't have a formal marketing partner for Alrex. Sounds overly optimistic short-term to me, though I remain quite bullish longer term on this stock into 1999 and beyond. --Ariella